Anonymous wrote:Get back on the tax return, not on the house
Anonymous wrote:Anonymous wrote:Yes rates are low now so you won't earn much in interest, per se, but why in the world would you loan your money to the govt. for free when you can engage in tax planning and keep it for yourself?
That $1k example that I could have given the govt. at no return to me would have earned 8-12% if invested in my portfolio last yr.
YMMV but I prefer to do it that way...
remember too that if points are financed they must be amortized over the life of the loan, so very little deduction per year vs. a cash payment of points...
I think that's an apples and oranges comparison. Getting a refund is a perfectly sensible thing to do if the alternative to it was keeping the money in your checking account, or your online internet savings account, or some other short-term, safe investment vehicle. In fact, getting a refund is now the only way to get a paper i-bond and an i-bond is a great investment if you are looking for safe, liquid investments.
If instead your plan is to put every spare nickel into the stock market then I agree getting a refund will involve a short delay in investing those dollars which may marginally reduce (or increase) your return (although anything other than an ACH transfer to a mutual fund would pretty much eat up the money in transaction costs).
Anonymous wrote:Yes rates are low now so you won't earn much in interest, per se, but why in the world would you loan your money to the govt. for free when you can engage in tax planning and keep it for yourself?
That $1k example that I could have given the govt. at no return to me would have earned 8-12% if invested in my portfolio last yr.
YMMV but I prefer to do it that way...
remember too that if points are financed they must be amortized over the life of the loan, so very little deduction per year vs. a cash payment of points...
Anonymous wrote:Yes rates are low now so you won't earn much in interest, per se, but why in the world would you loan your money to the govt. for free when you can engage in tax planning and keep it for yourself?
That $1k example that I could have given the govt. at no return to me would have earned 8-12% if invested in my portfolio last yr.
YMMV but I prefer to do it that way...
remember too that if points are financed they must be amortized over the life of the loan, so very little deduction per year vs. a cash payment of points...
Anonymous wrote:Anonymous wrote:Tax refunds are essentially interest free loans you make to the government, so they're not something you should look at as a good thing.
The ideal tax bottom line IMO and my accountant's, is to owe about $500 or less so you won't have to do estimated payments next year, but you also haven't been giving the govt. the use of your money for free (at no interest).
If you get a big refund adjust your withholding so that you will not overpay so much next year via withholding.
Tax refunds aren't "gifts" or manna from heaven, they're your money coming back to you after not growing for as long as the govt. has held it.
Maybe back when you could earn 5% or more interest on your money that advice was worth something, but these days interest on $1,000 for a year probably would buy you 2 first class postage stamps (but some people are pretty happy to find they've saved a chunk of $).
OP, one way to think of it is if owning a house is the only thing that changes on your taxes, then you are basically adding a tax deduction for the loan interest and taxes you pay. For a 30 year mortgage at 3.5%, roughly 2/3 of your PITI would be tax deductible, so if your PITI was $1500, and you are paying a 25% tax rate, then roughly $1000 would be deductible, 25% of which ($250 per month) you would get back on your taxes. Of course that's very rough but it might give you a sense.
Anonymous wrote:Anonymous wrote:Tax refunds are essentially interest free loans you make to the government, so they're not something you should look at as a good thing.
The ideal tax bottom line IMO and my accountant's, is to owe about $500 or less so you won't have to do estimated payments next year, but you also haven't been giving the govt. the use of your money for free (at no interest).
If you get a big refund adjust your withholding so that you will not overpay so much next year via withholding.
Tax refunds aren't "gifts" or manna from heaven, they're your money coming back to you after not growing for as long as the govt. has held it.
Maybe back when you could earn 5% or more interest on your money that advice was worth something, but these days interest on $1,000 for a year probably would buy you 2 first class postage stamps (but some people are pretty happy to find they've saved a chunk of $).
OP, one way to think of it is if owning a house is the only thing that changes on your taxes, then you are basically adding a tax deduction for the loan interest and taxes you pay. For a 30 year mortgage at 3.5%, roughly 2/3 of your PITI would be tax deductible, so if your PITI was $1500, and you are paying a 25% tax rate, then roughly $1000 would be deductible, 25% of which ($250 per month) you would get back on your taxes. Of course that's very rough but it might give you a sense.
Anonymous wrote:Tax refunds are essentially interest free loans you make to the government, so they're not something you should look at as a good thing.
The ideal tax bottom line IMO and my accountant's, is to owe about $500 or less so you won't have to do estimated payments next year, but you also haven't been giving the govt. the use of your money for free (at no interest).
If you get a big refund adjust your withholding so that you will not overpay so much next year via withholding.
Tax refunds aren't "gifts" or manna from heaven, they're your money coming back to you after not growing for as long as the govt. has held it.